Is it realistically possible to structure things so that an organization cannot fail within some time window? I'm skeptical. If there's some wind-down (or refund) money held in escrow, it's reasonable to expect that maybe a semester window might be realistically possible. A couple years probably isn't. It would be a lousy situation especially to the degree credits weren't easily or fully transferable but it's not clear to me how much power the government has to do something about it.
I'm not saying make it literally impossible for an institution to fail, I'm just saying we should mitigate the risk by making sure there's some funds in reserve to act as collateral and mitigate cash flow problems while they're winding down. In addition pass some of that liability off onto the directors. Just making it clear that they have a fiduciary duty to students would go a long way.
Right now if a for-profit college is going under there's no incentive at all to try and minimize the impact to students. If you know that a degree program is getting the axe in 6 months it's pretty scummy to still be accepting freshmen into it. From a business standpoint not doing that means passing up hundreds of thousands of dollars in tuition while still incurring the same costs in terms of facilities and faculty.
UK: further education colleges are state funded, I can't think of any purely private ones off the top of my head. The funding organisations would act to 'protect provision' if a college did fail - the funders can require mergers &c.
The fees they are charging tend to suggest that the University is not claiming skills funding agency money for this foundation course. In the UK further education colleges work at a level below universities and what we call 'level 3' qualifications (e.g. A levels, BTEC National Diploma &c) are needed to enter most university courses. Universities can offer their own foundation courses - a foundation year is common in the fine art field.
